Canada’s unemployment rate fell to 6.9 per cent in October, down 0.2 percentage points from the previous month, as the economy added 67,000 jobs, mostly concentrated in part-time jobs.
Statistics Canada said Friday the gains were driven by job creation in wholesale and retail trade, transportation and storage, information, culture and recreation, and public services. Youth unemployment (between 15 and 24 years old) also decreased for the first time since February, falling 0.6 percentage points to 14.1 percent.
Here’s what economists say about the latest jobs data and what it means for the Bank of Canada’s future interest rate decisions.
‘Surprise impulse’: Economics of capital
The October employment gain was “much stronger than we or the consensus had expected and follows an equally strong September that also far exceeded consensus expectations,” Alexandra Brown, North America economist at Capital Economics Ltd., said in a note.
Brown noted that the gains were “entirely driven by the private sector” and industries “most exposed to trade,” including wholesale and retail trade, transportation and warehousing, and manufacturing.
“This provides some reassurance that activity in those sectors is beginning to recover, presumably in part because the average tariff rate on Canada’s exports to the United States remains relatively low, around five per cent,” he said.
Brown also said job gains in information, culture and recreation may be related “to both the unusually warm weather and the Blue Jays’ run to the World Series.”
Hours worked decreased 0.2 per cent in October, which Brown said “largely reflects labor disputes,” including the teachers’ strike in Alberta. While the job growth was driven by part-time work, Brown said “we wouldn’t put too much stock in it” because it reversed an “unusually large” increase of 106,000 full-time positions in September.
“The surprise boost to employment and the drop in the unemployment rate in October reinforces the Bank of Canada’s view that it should now stay on the sidelines and wait for more clarity on the impact of tariffs on the economy and inflation,” Brown said.
Resilience, but not strength: TD Economics
While “strong, consecutive job growth” over the past two months is showing that Canada’s labor market is more “resilient to trade tensions” than expected, the October data is “not a home run,” Leslie Preston, managing director and senior economist at TD Economics, said in a note.
Preston said that although labor force growth has “slowed dramatically” this year, it is still outpacing job creation; He noted that the unemployment rate is still higher than the 6.6 percent level recorded in January.
“If we zoom out, we see that the labor market has still weakened through 2025 on several dimensions,” Preston said. “Even with a stricter immigration policy slowing labor force growth, the unemployment rate has risen and wage pressures have cooled compared to a year ago.”
Preston said the latest data will make the Bank of Canada “more comfortable on the sidelines” and allow rate cuts from its last easing cycle to “work their way through the economy.”
“The Bank expects lower inflationary pressures from a weak domestic economy to offset inflationary pressures from U.S. tariffs and the restructuring of global supply chains,” Preston said.
While gains in September and October offset losses in July and August, Preston said “overall labor market conditions remain weak.”
“While this report shows some resilience in Canada’s labor market, it is not about strength,” he said.
‘Volatile survey’: Scotiabank Economía
“Canada accumulated fairly low-quality jobs, reduced the unemployment rate, and saw supercharged wage growth and a temporary drop in hours worked,” Derek Holt, vice president and head of capital markets economics at Bank of Nova Scotia, said in a note.
Holt said those factors “vindicate” the Bank of Canada’s “clear hold signal” on its easing cycle and the “resistance of Prime Minister Mark Carney’s administration against increasing cyclical stimulus,” at least for now.
“While it’s a turn of the wheel for a volatile survey, we can’t dismiss two months of strong gains with more statistical confidence than we could dismiss the summer’s brief smooth trail as mere statistical noise,” Holt said.
He said it was “not a sign of great quality” that an increase of 85,000 part-time jobs boosted overall gains, while the number of full-time jobs fell by 19,000. He also noted that the industries driving job growth tend not to have “relatively high-paying jobs” and rely more on part-time workers compared to other sectors.
Wage growth “super accelerated” by 9.6 percent month over month on an annualized and seasonally adjusted basis, which Holt said was the “strongest increase” since June 2022.
“We continue to expect strong…wage growth as a third of Canada’s workforce governed by expired collective agreements continues to reset wage growth to make up for what they negotiated about four years ago on average. Unfortunately, data on wage agreements is lagging again behind July,” Holt said.
• Email: jswitzer@postmedia.com
